Southwest Airlines Ends Free Checked Bags Era, and More

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Bags No Longer Fly Free: Southwest Makes Historic Policy Shift

Southwest Airlines just announced that it will end its iconic 54-year-old "bags fly free" policy, implementing checked baggage fees for most passengers starting May 28, 2025.

The Dallas-based carrier will also introduce a new Basic fare category, marking a significant shift from its traditional customer-friendly approach as it works to boost profitability under pressure from activist investors.

Key Points

• Only A-List Preferred loyalty members and Business Select fare passengers will continue receiving two free checked bags

• A-List members and Southwest credit card holders will get one free checked bag

• This follows Southwest's decision last year to end its open seating policy, including listings on third-party travel sites like Expedia

• CEO Bob Jordan reversed his previous stance from just months ago that "bags will absolutely fly free," citing opportunities to address customer demands and improve profitability

• The airline has faced pressure from activist investor Elliott Investment Management, which secured five board seats after taking a stake in the company

• Southwest aims to increase its operating margin from 2% last year to at least 10% by 2027

What It Means

Southwest is abandoning its long-standing differentiation strategy to align with industry norms, potentially risking customer loyalty in exchange for improved financial performance.

The move could generate an estimated $1.5 billion in additional annual revenue while helping Southwest reach CEO Bob Jordan's target of 10% operating margin by 2027.

However, the airline now faces the challenge of maintaining its identity while competing more directly with major carriers.

Other Key Aviation Industry Updates for Today 👇

2. Delta Airlines Slashes Profit Outlook Amid Economic Anxiety

Delta Air Lines slashed its Q1 2025 profit forecast by 50-70% on March 10, citing weakening consumer and corporate confidence amid economic uncertainty.

The airline now expects revenue growth of 3-4% (down from 7-9%) and earnings per share of $0.30-0.50 (down from $0.70-1.00).

Delta's stock fell 14%, triggering declines across the airline sector.

Premium, international, and loyalty segments remain resilient while domestic demand softens. CEO Ed Bastian noted decreased corporate spending, particularly in aerospace, defense, automotive, and technology sectors.

3. American Airlines Doubles First Quarter Loss Projection

American Airlines announced today it expects a larger first-quarter loss than previously projected. The airline now forecasts an adjusted loss per share of 60 cents to 80 cents, doubling its earlier estimate of 20 cents to 40 cents.

The company cited tariff pressures and government spending uncertainties as factors that could dampen travel demand.

This announcement comes despite American Airlines reporting strong fourth-quarter 2024 results with record revenue of $13.7 billion.

4. European Airlines Tumble Amid Trump Recession Concerns

European airline stocks are declining as Trump's recent comments about a possible recession create uncertainty about American travel spending.

Wall Street experienced its worst day since 2022 yesterday, with the S&P 500 dropping 3.6% and the Nasdaq falling 4%. The US uncertainty is affecting global markets, including European airlines.

Trump acknowledged a "period of transition" for the US economy as his tariff policies take effect.

Economic indicators suggest potential contraction, with the Atlanta Fed forecasting a 2.8% decline in Q1 2025.

The market volatility follows Trump's back-and-forth on tariffs against Canada and Mexico.

5. Korean Air Reveals First Brand Refresh in 41 Years Following Asiana Deal

Korean Air unveiled its first major brand redesign since 1984, featuring a modernized logo and new aircraft livery with a minimalist dark blue taeguk symbol.

The refresh follows Korean Air's $1.3 billion acquisition of Asiana Airlines, which will operate as a subsidiary for two years before fully merging by January 2027.

The airline also introduced upgraded dining experiences, new Frette bedding in first class, and plans for renovated lounges at Incheon, Los Angeles, and New York JFK airports by late 2026.

6. Brazil Grounds Voepass Seven Months After Fatal Crash

Brazilian aviation regulator ANAC suspended all Voepass operations, citing safety concerns seven months after the airline's ATR-72 crash near São Paulo killed 62 people.

The suspension follows February inspections revealing "deterioration" in the airline's management system and failure to address previously identified irregularities.

Voepass, Brazil's fourth-largest carrier with less than 1% market share, recently began debt restructuring that could lead to bankruptcy protection.

The airline maintains its fleet is airworthy and plans to prove compliance with safety regulations.

7. Fleet Modernization Drives Wheels Up's Path to Profitability

Wheels Up announced Q4 and full-year 2024 results, showing financial improvement despite revenue declining to $792.1 million from $1.25 billion year-over-year.

The private aviation company reported record contribution margins of 19.3% in Q4, up from 14.8% in Q3, driven by a 33% increase in fleet utility.

CEO George Mattson highlighted December's near-breakeven performance as the company modernizes its fleet with 18 new Phenom jets.

Wheels Up expects to achieve positive adjusted EBITDA for full-year 2025, with John Verkamp joining as CFO on March 31.

8. Pilotless eVTOL Aircraft Makes Debut in Mexican Airspace

EHang successfully completed the first flight of its EH216-S pilotless eVTOL aircraft in Mexico yesterday, marking the aircraft's debut in the country.

This achievement followed Mexico's Federal Civil Aviation Agency (AFAC) granting a Special Airworthiness Certificate for the unmanned system.

The milestone expands EHang's global presence to 19 countries and was facilitated through collaboration with local partner Air Mobility.

The companies aim to advance Mexico's Advanced Air Mobility industry, leveraging the country's dense urban population, tourism sector, and manufacturing base.

9. Hebei Airlines Selects Lufthansa Technik for Boeing 737 Engine Maintenance

Lufthansa Technik continues expanding its engine maintenance presence in China, securing a new contract with Hebei Airlines for CFM56-7B engine MRO services.

This follows their recent CAAC approval for engine repair in China through Lufthansa Technik Shenzhen, which can now service CFM56-5B/7B and V2500 engines.

The company has been growing its global engine maintenance portfolio, with recent contracts including WestJet's 15-year LEAP-1B deal and Smartwings' agreement covering both CFM56-7B and LEAP-1B engines for their Boeing 737 fleet.

10. MagniX HeliStorm Engines Bring Electric Power to Helicopter Market

magniX unveiled its new HeliStorm electric engine line yesterday, designed specifically for helicopters and airborne power generation.

The first model delivers 330kW while weighing just 75kg, operating at 6,000-7,000 RPM.

When paired with magniX's Samson batteries, HeliStorm offers a complete electric solution for rotorcraft.

The company builds on experience from previous Robinson R44 helicopter integrations, which achieved the first point-to-point electric helicopter flight in 2022.

Robinson Helicopters CEO David Smith expressed support for continued collaboration on sustainable helicopters.